Tata Steel Europe has announced a €12 per tonne carbon surcharge to cover the rising cost of carbon allowances, which will apply to all new steel sales contracts in Europe and the UK. The move is in line with Tata Steel’s carbon strategy, which aims to reduce carbon emissions by 30 to 40 percent by 2030 and to be carbon neutral by 2050, according to a company statement.
Faced with the increasing shortage of carbon emission permits and rising prices, it is necessary for steel enterprises to take measures to cope with the rising costs. In order to ensure the future sustainability of the steel industry in the EU and the UK, Tata Steel Europe believes that these increased costs need to be passed on and has made the carbon dioxide surcharge one of the publicly influenced factors in pricing.
Other leading European steelmakers are expected to follow suit. Industry insiders predict that the shift to fossil-free steel production will result in a 35% to 100% increase in fossil-free steel prices. As a result, European steelmakers’ new pricing policies will impose additional costs on steel consumers.
The EU ETS is the world’s first carbon trading scheme aimed at reducing greenhouse gas emissions from energy-intensive industries. This year, the free quota has been further reduced and the purchase price has been rising. The UK is in the process of introducing the UK Emissions Trading Scheme (UK ETS), which is based on similar principles to the EU Emissions Trading System, with a market price of €45 a tonne, up from €21 a year ago.